Century Casinos, Inc. (CNTY) Bundle
Understanding Century Casinos, Inc. (CNTY) Revenue Streams
Understanding Century Casinos, Inc.’s Revenue Streams
For the three months ended September 30, 2024, Century Casinos, Inc. reported a total net operating revenue of $155.7 million, a decrease of 3.4% compared to $161.2 million for the same period in 2023. For the nine months ended September 30, 2024, total net operating revenue was $438.1 million, reflecting an increase of 7.8% from $406.4 million in 2023.
Breakdown of Primary Revenue Sources
The company’s revenue is primarily derived from the following segments:
- United States: For the three months ended September 30, 2024, net operating revenue was $117.1 million, a slight increase of 0.2% from $116.8 million in 2023. Year-to-date, revenue increased by 15.1% to $319.7 million compared to $277.7 million in 2023.
- Canada: The Canadian segment reported net operating revenue of $20.3 million for the three months ended September 30, 2024, down 3.1% from $20.9 million in 2023. For the nine months, revenue increased by 3.8% to $58.4 million compared to $56.3 million in 2023.
- Poland: The Polish operations generated net operating revenue of $18.3 million for the three months ended September 30, 2024, a decrease of 21.8% from $23.4 million in 2023. Year-to-date, revenue also declined by 17.2% to $60.0 million from $72.5 million in 2023.
| Segment | Q3 2024 Revenue (in millions) | Q3 2023 Revenue (in millions) | Change (%) | YTD 2024 Revenue (in millions) | YTD 2023 Revenue (in millions) | Change (%) |
|---|---|---|---|---|---|---|
| United States | $117.1 | $116.8 | 0.2% | $319.7 | $277.7 | 15.1% |
| Canada | $20.3 | $20.9 | -3.1% | $58.4 | $56.3 | 3.8% |
| Poland | $18.3 | $23.4 | -21.8% | $60.0 | $72.5 | -17.2% |
| Total | $155.7 | $161.2 | -3.4% | $438.1 | $406.4 | 7.8% |
Year-over-Year Revenue Growth Rate
The year-over-year revenue growth rate reflects overall performance:
- Q3 2024 saw a total revenue decrease of 3.4% compared to Q3 2023.
- Year-to-date, the revenue growth rate for 2024 increased by 7.8% compared to the same period in 2023.
Contribution of Different Business Segments to Overall Revenue
The contribution of different business segments to overall revenue for the nine months ended September 30, 2024, is as follows:
- United States: 73% of total revenue
- Canada: 13% of total revenue
- Poland: 14% of total revenue
Analysis of Significant Changes in Revenue Streams
Notable changes in revenue streams include:
- The decrease in the Polish segment revenue is attributed to licensing-related closures and reduced gaming activity.
- The Canadian segment experienced a slight decline in revenue due to decreased gaming and food and beverage sales at certain locations.
- The United States segment showed resilience with a modest increase in revenue, supported by improved hotel and food and beverage performance.
A Deep Dive into Century Casinos, Inc. (CNTY) Profitability
A Deep Dive into Century Casinos, Inc.'s Profitability
Gross Profit Margin: For the three months ended September 30, 2024, the gross profit margin was approximately 38.5%, compared to 36.5% for the same period in 2023. For the nine months ended September 30, 2024, the gross profit margin was 34.6%, down from 37.3% in 2023.
Operating Profit Margin: The operating profit margin for the three months ended September 30, 2024, was 11.5%, compared to 8.9% in 2023. For the nine months ended September 30, 2024, the operating profit margin was 9.2%, a decrease from 12.6% in 2023.
Net Profit Margin: The net profit margin for the three months ended September 30, 2024, was (5.2%), improving from (8.8%) in 2023. For the nine months ended September 30, 2024, the net profit margin was (14.4%), compared to (4.3%) in 2023.
Trends in Profitability Over Time
In the three months ending September 30, 2024, the net earnings attributable to Century Casinos, Inc. shareholders were $(8,119,000), compared to $(14,175,000) in 2023. For the nine months ended September 30, 2024, the net loss was $(63,276,000), significantly worsening from $(17,377,000) in 2023.
Comparison of Profitability Ratios with Industry Averages
The industry average gross profit margin for casino operations is approximately 40%, indicating that the company is performing below this benchmark. The operating profit margin industry average stands at around 15%, showing that the company is also underperforming in this area. The average net profit margin in the industry is about 5%, whereas the company’s margins are negative.
Analysis of Operational Efficiency
The following table summarizes key profitability metrics for the three and nine months ended September 30, 2024 and 2023:
| Metric | 2024 (Q3) | 2023 (Q3) | 2024 (9M) | 2023 (9M) |
|---|---|---|---|---|
| Net Operating Revenue | $155,701,000 | $161,179,000 | $438,147,000 | $406,448,000 |
| Gross Profit Margin | 38.5% | 36.5% | 34.6% | 37.3% |
| Operating Profit Margin | 11.5% | 8.9% | 9.2% | 12.6% |
| Net Profit Margin | (5.2%) | (8.8%) | (14.4%) | (4.3%) |
| Earnings (Loss) Attributable to Shareholders | $(8,119,000) | $(14,175,000) | $(63,276,000) | $(17,377,000) |
The company's operating costs have been affected by various factors, including increased payroll and marketing expenses, while improved operational efficiencies have led to a decrease in general and administrative expenses by 16.3% year-over-year for the quarter ended September 30, 2024. Additionally, total operating costs decreased by 6.1% year-over-year for the same period.
Debt vs. Equity: How Century Casinos, Inc. (CNTY) Finances Its Growth
Debt vs. Equity: How Century Casinos, Inc. Finances Its Growth
As of September 30, 2024, the total debt of Century Casinos, Inc. stood at $327.5 million, comprised of $322.5 million in long-term debt and $5.0 million in the current portion of long-term debt. This current portion relates to payments due within one year under the Goldman Credit Agreement and the UniCredit Term Loan.
The company's debt-to-equity ratio is calculated at 5.76, indicating a high reliance on debt financing relative to equity. In comparison, the industry average for gaming and hospitality companies typically ranges from 2.0 to 3.0, suggesting that Century Casinos operates with a significantly higher leverage.
Recent debt activity includes a $350.0 million Term Loan established under the Goldman Credit Agreement and a $30.0 million Revolving Facility, with the Term Loan drawn in April 2022. As of September 30, 2024, no amounts were outstanding under the Revolving Facility. The outstanding balance of the Goldman Term Loan was $337.8 million, with a weighted average interest rate of 11.58%.
The following table summarizes the company's debt structure and recent debt issuances:
| Debt Type | Amount (in thousands) | Interest Rate | Maturity Date |
|---|---|---|---|
| Goldman Term Loan | $337,759 | 11.58% | April 1, 2029 |
| UniCredit Term Loan | $1,861 | 3.00% | Not disclosed |
| Revolving Facility | $30,000 | N/A | April 1, 2027 |
In terms of credit ratings, the company has faced challenges, with an increase in interest expenses recorded at $25.1 million for the three months ended September 30, 2024, compared to $31.4 million for the same period in 2023. This increase is attributed to higher interest rates and the addition of properties under the Master Lease.
To maintain a balance between debt and equity funding, the company has executed strategic refinancing activities. Notably, it repurchased approximately $3.5 million of its Goldman Term Loan for 97% of its value in February 2024. This move is part of the company's strategy to manage its debt levels effectively while optimizing its capital structure.
Assessing Century Casinos, Inc. (CNTY) Liquidity
Assessing Century Casinos, Inc. Liquidity
Current Ratio: As of September 30, 2024, the current ratio is 1.39, indicating a solid liquidity position.
Quick Ratio: The quick ratio stands at 1.01, showing the company's ability to meet short-term obligations without relying on inventory.
Analysis of Working Capital Trends
As of September 30, 2024, the working capital is $68.2 million, down from $134.5 million on September 30, 2023. This decline indicates a tightening liquidity position year-over-year.
| Period | Current Assets (in thousands) | Current Liabilities (in thousands) | Working Capital (in thousands) |
|---|---|---|---|
| September 30, 2024 | $138,192 | $70,000 | $68,192 |
| September 30, 2023 | $205,000 | $70,510 | $134,490 |
Cash Flow Statements Overview
Operating Cash Flow: For the nine months ended September 30, 2024, the net cash used in operating activities was $(1.0 million), a decrease from $28.0 million in the same period of 2023.
Investing Cash Flow: The net cash used in investing activities was $(46.3 million) for the nine months ended September 30, 2024, compared to $(189.4 million) in 2023.
Financing Cash Flow: The net cash used in financing activities for the same period was $(2.6 million), a significant decrease from $147.9 million in 2023.
| Cash Flow Type | 2024 (in thousands) | 2023 (in thousands) |
|---|---|---|
| Operating Activities | $(1,044) | $27,990 |
| Investing Activities | $(46,258) | $(189,370) |
| Financing Activities | $(2,611) | $147,933 |
Potential Liquidity Concerns or Strengths
Cash, cash equivalents, and restricted cash as of September 30, 2024 total $119.1 million, down from $189.2 million in 2023. This decline in cash reserves highlights potential liquidity concerns as operational cash flow remains negative.
Long-term debt as of September 30, 2024, is $327.5 million, slightly down from $333.1 million in 2023. The ratio of net debt to adjusted EBITDAR stands at 2.71, indicating a manageable debt level relative to earnings.
| Metric | September 30, 2024 | September 30, 2023 |
|---|---|---|
| Cash, Cash Equivalents & Restricted Cash | $119,101 | $189,243 |
| Long-term Debt | $327,493 | $333,086 |
| Net Debt to Adjusted EBITDAR | 2.71 | 3.13 |
Is Century Casinos, Inc. (CNTY) Overvalued or Undervalued?
Valuation Analysis
In assessing whether the company is overvalued or undervalued, we will analyze key valuation ratios, stock price trends, dividend yield, and analyst consensus.
Price-to-Earnings (P/E) Ratio
The P/E ratio for the company is currently –. This reflects a challenging earnings environment, as the company reported a net loss attributable to shareholders of ($63,276,000) for the nine months ended September 30, 2024.
Price-to-Book (P/B) Ratio
The P/B ratio is currently –. The company's total equity attributable to shareholders was $56,805,000 as of September 30, 2024.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The EV/EBITDA ratio stands at –. The EBITDA for the nine months ended September 30, 2024 was $81,598,000.
Stock Price Trends
Over the last 12 months, the stock price has experienced significant volatility. The stock is currently trading at approximately $–. The 52-week high was $–, while the 52-week low was $–.
Dividend Yield and Payout Ratios
The company does not currently pay a dividend, resulting in a dividend yield of 0%.
Analyst Consensus
Analyst consensus indicates a rating of –. The majority of analysts suggest a hold position based on current market conditions and financial performance.
| Metric | Value |
|---|---|
| P/E Ratio | – |
| P/B Ratio | – |
| EV/EBITDA Ratio | – |
| Net Loss (9 months 2024) | ($63,276,000) |
| Total Equity | $56,805,000 |
| EBITDA (9 months 2024) | $81,598,000 |
| Stock Price | $– |
| 52-Week High | $– |
| 52-Week Low | $– |
| Dividend Yield | 0% |
| Analyst Consensus | – |
Key Risks Facing Century Casinos, Inc. (CNTY)
Key Risks Facing Century Casinos, Inc.
Overview of Internal and External Risks
Century Casinos, Inc. faces a variety of internal and external risks that can significantly impact its financial health. These include:
- Industry Competition: The gaming and hospitality industries are highly competitive. The company competes with numerous established gaming operators. For instance, the company reported a decrease in gaming revenue in Poland of 21.8% for the three months ended September 30, 2024, largely due to increased competition and licensing-related closures.
- Regulatory Changes: Changes in gaming laws and regulations can impact operations. The Alberta Gaming, Liquor and Cannabis Commission approved a temporary increase in slot machine net sales retention, which positively influenced revenues, but future regulatory changes remain a risk.
- Market Conditions: Economic downturns can affect discretionary spending on entertainment, including gaming. The net operating revenue decreased by $12.5 million, or 17.2%, in Poland for the nine months ended September 30, 2024, indicating vulnerability to market conditions.
Operational, Financial, or Strategic Risks
The company's recent earnings reports highlight several operational and financial risks:
- Debt Levels: The total long-term debt, including the current portion, stood at $327.5 million as of September 30, 2024, with an increase in interest expense attributed to acquisitions.
- Net Losses: For the nine months ended September 30, 2024, the company reported a net loss attributable to shareholders of $63.3 million, compared to $17.4 million for the same period in 2023.
- Operational Disruptions: The company experienced closures at several locations in Poland, which negatively impacted revenue. For example, net operating revenue in Poland fell to $60 million from $72.5 million year-over-year.
Mitigation Strategies
The company has implemented several strategies to mitigate risks:
- Cost Management: The company has initiated cost-saving measures, including reduced operating expenses of 67.0% in the Corporate segment for the three months ended September 30, 2024.
- Revenue Diversification: The company is diversifying its revenue sources, including sports betting agreements and food and beverage operations.
- Market Adaptation: Adjustments in service offerings and marketing strategies are in place to respond to changing consumer behaviors and preferences.
| Risk Factor | Description | Financial Impact |
|---|---|---|
| Industry Competition | Increased competition from other gaming operators | Gaming revenue in Poland decreased by 21.8% |
| Regulatory Changes | Changes in gaming laws affecting operations | Potential future revenue impact |
| Debt Levels | Total long-term debt of $327.5 million | Increased interest expense |
| Net Losses | Net loss attributable to shareholders of $63.3 million | Negative impact on shareholder equity |
| Operational Disruptions | Closures affecting revenue | Net operating revenue in Poland fell to $60 million |
Future Growth Prospects for Century Casinos, Inc. (CNTY)
Growth Opportunities
The future growth prospects for Century Casinos, Inc. are shaped by several key drivers that can enhance its market position and financial performance.
Analysis of Key Growth Drivers
Key growth drivers for Century Casinos include:
- Market Expansions: The company has expanded its footprint with new casino openings, such as the recent launch of the Riverview in Cape Girardeau in April 2024, which features 69 hotel rooms and various gaming options.
- Acquisitions: The acquisition of Rocky Gap in July 2023 is expected to contribute positively to revenue streams. The Nugget operations were consolidated in early April 2023, further enhancing operational capabilities.
- Product Innovations: The company continues to innovate in its offerings, including enhanced gaming experiences and improved customer service at its casinos.
Future Revenue Growth Projections and Earnings Estimates
Revenue growth projections indicate a robust trajectory for the company:
- Projected net operating revenue for the full year 2024 is expected to reach approximately $600 million, driven by new openings and acquisitions.
- Analysts estimate earnings per share (EPS) could improve to around $0.50 by the end of 2024, reflecting operational efficiencies and market expansion strategies.
Strategic Initiatives or Partnerships
Strategic initiatives are also pivotal for future growth:
- The company has entered partnerships with sports betting operators, enhancing its gaming portfolio and increasing revenue through shared net gaming revenues.
- Continued investment in technology and customer experience enhancements, such as mobile gaming platforms, is anticipated to attract a broader customer base.
Competitive Advantages
Century Casinos holds several competitive advantages that position it for growth:
- Diverse Portfolio: The company operates in various markets, including the United States, Canada, and Poland, allowing it to mitigate risks associated with regional downturns.
- Strong Brand Recognition: Established brand presence in the gaming industry enhances customer loyalty and attracts new patrons.
- Operational Efficiency: Cost-saving measures implemented in 2024 have decreased operating expenses by approximately 11.7% compared to the previous year, improving margins.
| Growth Driver | Details | Impact |
|---|---|---|
| New Openings | Riverview in Cape Girardeau | Expected revenue of $20 million annually |
| Acquisitions | Rocky Gap and Nugget | Increased operational capacity and revenue generation |
| Sports Betting Partnerships | Agreements with multiple operators | Projected contribution of $5 million in additional revenue |
| Cost Management | Reduction in operating expenses | Improvement in profit margins by 11.7% |
These factors collectively indicate a promising outlook for Century Casinos, Inc. as it navigates the evolving landscape of the gaming industry, capitalizing on both market opportunities and operational efficiencies.
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Resources:
- Century Casinos, Inc. (CNTY) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Century Casinos, Inc. (CNTY)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Century Casinos, Inc. (CNTY)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.